Canadian Tire Corporation, Limited · TSX:CTC
Canadian Tire — Q2 2023 Earnings Presentation
24 slides from Canadian Tire's earnings presentation, Aug 10, 2023
Slide 1: Canadian Tire Corporation Q2 2023 Financial Results and Segment Eliminations
Canadian Tire Corporation Q2 2023 Financial Results and Segment Eliminations
Slide 2: Forward Looking Information
Forward Looking Information This document contains information that may constitute forward-looking information reflecting Management’s current expectations relating to matters such as future financial performance and operating results of the Company. Forward-looking information provides insights reg
Slide 3: Executive Participants
Executive Participants Greg Hicks President & Chief Executive Officer, Canadian Tire Corporation Gregory Craig Executive Vice President & Chief Financial Officer, Canadian Tire Corporation TJ Flood President, Canadian Tire Retail SECOND QUARTER 2023 | EXECUTIVE PARTICIPANTS 3
Slide 4: Table of Contents
Table of Contents Topic Slide Number Q2 2023 HIGHLIGHTS 5 Q2 2023 DILUTED EARNINGS PER SHARE BRIDGE 8 IMPACT OF CHANGE IN ACCOUNTING ESTIMATE FOR MARGIN-SHARING ARRANGEMENT 10 Q2 2023 FINANCIAL RESULTS AND NORMALIZATION 13 SEGMENT ELIMINATIONS 21 SECOND QUARTER 2023 | TABLE OF CONTENTS 4
Slide 5: Q2 2023 Highlights
Q2 2023 HIGHLIGHTS SECOND QUARTER 2023 | HIGHLIGHTS 5
Slide 6: Q2 2023 Highlights
Q2 2023 Highlights • Consolidated comparable sales1 were up 0.1%, following 5.0% growth in Q2 2022, as consumer spend softened in the latter part of the quarter, particularly in Ontario. o Canadian Tire Retail comparable sales1 were up 0.1%, with a sales mix shift to more essential and value offerin
Slide 7: Q2 2023 Highlights (continued)
Q2 2023 Highlights (continued) • Normalized consolidated income before income taxes (“IBT”)1 was $281.8 million, compared to $284.3 million in the prior year. Consolidated IBT was $173.9 million, compared to $238.1 million in the prior year: o Lower retail revenue, combined with strategic investment
Slide 8: Q2 2023 Diluted EPS Bridge
Q2 2023 DILUTED EPS BRIDGE SECOND QUARTER 2023 | EPS BRIDGE 8
Slide 9: Impacts to Q2 2023 Diluted EPS
Impacts to Q2 2023 Diluted EPS Normalized Diluted EPS was $3.08, adjusting for the direct Normalizing items: impact of the DC fire and the GST/HST-related charge 1 (-) A.J. Billes DC fire (direct costs): $74.6M (or the equivalent of $0.97 of Diluted EPS) 2 (-) One-time GST/HST-related charge: $33.3M
Slide 10: Impact of Change in Accounting Estimate for Margin-Sharing Arrangement
IMPACT OF CHANGE IN ACCOUNTING ESTIMATE FOR MARGIN- SHARING ARRANGEMENT SECOND QUARTER 2023 | IMPACT OF CHANGE IN ACCOUNTING ESTIMATE FOR MSA 10
Slide 11: Background to Change in Accounting Estimate From Q1 2023
Background to Change in Accounting Estimate From Q1 2023 • Effective from the first quarter of 2023, the Company’s results reflect a change in accounting estimate relating to the Company’s MSA with Dealers. The Company has historically accrued the majority of the annual benefit from its MSA with the
Slide 12: Quarterly Phasing Impacts as a Result of Change in Accounting Estimate
Quarterly Phasing Impacts as a Result of Change in Accounting Estimate • Based on the experience gained since the inception of the MSA, the Company has developed a methodology to better estimate the impact on a quarterly basis. Effective in Q1 2023, the Company began to record the MSA throughout the
Slide 13: Q2 2023 Financial Results and Normalization
Q2 2023 FINANCIAL RESULTS AND NORMALIZATION SECOND QUARTER 2023 | CONSOLIDATED RESULTS 13
Slide 14: Q2 2023 Consolidated Financial Results
Q2 2023 Consolidated Financial Results YTD YTD (C$ in millions, except where noted) Q2 2023 Q2 2022 Change Q2 2023 Q2 2022 Change Retail sales1 $ 5,214.9 $ 5,363.8 (2.8) % $ 8,541.4 $ 8,785.2 (2.8) % Revenue $ 4,255.8 $ 4,404.0 (3.4) % $ 7,963.0 $ 8,241.4 (3.4) % Gross margin dollars $ 1,448.4 $ 1,3
Slide 15: Q2 2023 Normalizing Items
Q2 2023 Normalizing Items • The results of operations in the second quarter of 2023 include costs associated with the DC fire and the GST/HST-related charge which were considered as normalizing items. In 2022, costs relating to the Helly Hansen Russia exit and the Company’s Operational Efficiency pr
Slide 16: Selected Q2 2023 Normalized Metrics: Consolidated
Selected Q2 2023 Normalized Metrics: Consolidated (C$ in millions, except Normalizing Normalized Normalizing Normalized where noted) Q2 2023 Items 1 Q2 2023 2 Q2 2022 Items 1 Q2 20222 Change3 Revenue $ 4,255.8 $ — $ 4,255.8 $ 4,404.0 $ — $ 4,404.0 (3.4) % Cost of producing revenue 2,807.4 — 2,807.4
Slide 17: Retail Segment Financial Results
Q2 2023 Retail Segment Financial Results YTD YTD (C$ in millions, except where noted) Q2 2023 Q2 2022 Change Q2 2023 Q2 2022 Change Retail sales1 $ 5,214.9 $ 5,363.8 (2.8) % $ 8,541.4 $ 8,785.2 (2.8) % Revenue $ 3,896.1 $ 4,067.2 (4.2) % $ 7,234.0 $ 7,571.7 (4.5) % Gross margin dollars $ 1,250.9 $ 1
Slide 18: Selected Q2 2023 Normalized Metrics: Retail
Selected Q2 2023 Normalized Metrics: Retail (C$ in millions, except Normalizing Normalized Normalizing Normalized where noted) Q2 2023 Items1 Q2 20232 Q2 2022 Items1 Q2 20222 Change3 Revenue $ 3,896.1 $ — $ 3,896.1 $ 4,067.2 $ — $ 4,067.2 (4.2) % Cost of producing revenue 2,645.2 — 2,645.2 2,885.1 —
Slide 19: Financial Services Results
Q2 2023 Financial Services Results YTD YTD (C$ in millions) Q2 2023 Q2 2022 Change Q2 2023 Q2 2022 Change Revenue $ 364.5 $ 340.4 7.1 % $ 734.3 $ 672.1 9.2 % Gross margin dollars $ 179.5 $ 187.9 (4.5) % $ 390.8 $ 405.4 (3.6) % Gross margin rate1 49.2 % 55.2 % (596) bps 53.2 % 60.3 % (710) bps Other
Slide 20: Selected Q2 2023 Normalized Metrics: Financial Services
Selected Q2 2023 Normalized Metrics: Financial Services (C$ in millions, except where Normalizing Normalized Normalizing Normalized noted) Q2 2023 Items1 Q2 20232 Q2 2022 Items1 Q2 2022 Change3 Revenue $ 364.5 — $ 364.5 $ 340.4 — $ 340.4 7.1 % Gross margin dollars 179.5 — 179.5 187.9 — 187.9 (4.5) %
Slide 21: Segment Eliminations
SEGMENT ELIMINATIONS SECOND QUARTER 2023 | SEGMENT ELIMINATIONS 21
Slide 22: Segment Reporting Note Disclosure (Q2 2023)
Segment Reporting Note Disclosure BASED ON REPORTED Q2 2023 1 5 & 6 6 2 3 5 1 & 4 7 1 6 4 SECOND QUARTER 2023 | SEGMENT ELIMINATIONS 1 CT REIT revenue is comprised of $105.2 million of base rent and $32.6 million in expense and capital recoveries and other revenue. The property revenue attributable
Slide 23: Segment Reporting Note Disclosure (YTD Q2 2023)
Segment Reporting Note Disclosure BASED ON REPORTED YTD Q2 2023 5 & 6 6 3 5 & 4 7 6 SECOND QUARTER 2023 | YTD SEGMENT ELIMINATIONS 1 CT REIT revenue is comprised of $209.5 million of base rent and $65.8 million in expense and capital recoveries and other revenue. The property revenue attributable to
Slide 24: Thank You
Thank You For more information: http://investors.canadiantire.ca 24